The Continuing Failure of Green Conceit

May 23, 2012

President Obama and his allies in the environmental movement have promised to usher in a green economy that will create millions of new green jobs. Under the wise leadership of our energy bureaucracy, government officials have invested millions in taxpayer money in renewable energy providers, claiming to be providing the jobs of tomorrow, says Kenneth P. Green, a resident scholar at the American Enterprise Institute.

However, such promises are disingenuous and fail to deliver for a labor market that is hungry for job creation. This failure can be predicted by economic theory and proven by empirical results.

Economic theory emphasizes that government bureaucrats do not have magical knowledge of which technologies are going to outperform any other technologies.

The idea that bureaucrats have such knowledge is an example of what Friedrich Hayek called "the fatal conceit," and granting them power to act on knowledge they do not possess leads to inefficiency by misallocating capital to suboptimal ends.

Economic theory also tells us that jobs are not created by governments: governments merely transfer good fortune from one sector to another.

In this regard, to call any government action a "job creating measure" is to misrepresent the truth: that government stimulating jobs in one area robs them from somewhere else.

The employment and cost data coming out of the green energy sector is consistent with what economic theory predicted, namely that government action yielded too few jobs for too much money.

When talking about our bold green energy future, President Obama held up Spain as an example of what America should be doing.

Yet researchers at Spain's Universidad Rey Juan Carlos found that if America followed Spain's example, for every renewable energy job that the United States managed to create, the country should expect a loss of at least 2.2 traditional jobs on average.

They also found that green jobs are costly: each green job created in Spain's effort cost about $750,000, and only one in 10 of the new green jobs were permanent.

Thus, creating even 3 million new green jobs would cost $2.25 trillion dollars.

Most telling are the results on the ground: the Mackinac Center for Public Policy reports that in Michigan, federal stimulus money amounting to $34.5 million managed to create a mere 183 jobs amongst 14 companies.